Velocity and Monetary Targeting in Turkey

Date

1989

Author

Keyder, Nur

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The article aims at testing the stability of the velocity function in Turkey. över the 1966-1988 period and see if it can safely be used for future monetary targeting. Shifts and slope changes in the Mİ velocity function are captured using intercept and slope dummies. Income elasticity of money demand (nıl) is found to be belosv unity in the post 1980 period, thus income appears as one of the ex- planatory variables of the Mİ velocity.Econometric analysis indi- cates an important structural change in the Mİ velocity post 1980. However, the new equation estimated for 1980-1988 period is highly stable and is likely to remain so as long as the new economic en- vironment pıevails. Simulations made point to high degree of predic- tive power of the Mİ velocity. Thus, pıedicted velocity can be used with confidence in monetary targeting.

URI

https://hdl.handle.net/11511/111465

Collections

Department of Economics, Article